Oil, Stocks Rebound on Recovery Hopes

World stocks edged higher on Friday to 2009 highs and crude oil rebounded as investors shrugged off weak results from Microsoft to bid up drugmakers and energy shares on growing signs of economic recovery.

The dollar fell against the euro as figures showing a stabilizing euro zone economy and a good week for the U.S. stock market eroded demand for the greenback as a safe haven..

The rise in risk appetite on hopes that a global recession is bottoming out led oil prices to rebound and top $68 a barrel. Analysts and traders hope a turnaround in the global economy will lift battered fuel demand.

Solid corporate earnings and a slew of recent data boosted optimism about the economy and gave new life to a months-long rally in U.S. stocks that lifted the Dow <.DJI> above the 9,000 mark this week for the first time since early January.

"Overall, this was a very good week for sentiment," said Ronald Simpson, managing director of global currency analysis at Action Economics in Tampa, Florida.

The Dow and broader S&P 500 initially fell after Thursday's late news showing weak results from Microsoft Corp and American Express . That gave investors pause about global stocks that had risen more than 6 percent this week.

The Nasdaq snapped a 12-day string of gains, its longest run since 1992, to end 0.4 percent lower.

The MSCI world equity index <.MIWD00000PUS> is up about 14 percent this year, and despite declines in a leading index of European stocks and a slide in the Nasdaq, closed slightly above break-even on Friday.

Copper hit a nine-month high before settling 20 cents a pound lower and aluminium rose to eight-month highs in signs of strong investor confidence in an economic recovery.

"The strength of the rally is derived mainly from the idea that as we enter the end of this year and early next year, further economic gains will kick demand back in," said Gene McGillian, an analyst for Tradition Energy in Stamford, Connecticut.

The Dow Jones industrial average <.DJI> rose 23.95 points, or 0.26 percent, to 9,093.24. The Standard & Poor's 500 Index <.SPX> advanced 2.97 points, or 0.30 percent, to 979.26. But the Nasdaq Composite Index <.IXIC> shed 7.64 points, or 0.39 percent, to 1,965.96.

U.S. crude settled up 89 cents at $68.05 a barrel, the highest settlement since July 1. The gains extended a rally that has pushed prices up more than 14 percent since July 14.

London Brent crude rose $1.07 to settle at $70.32 a barrel, after topping $70 a barrel for the first time since July 1 earlier.

Gold futures for August delivery settled down $1.70 at $953.10 but held above $950 an ounce.

"The dollar's weakness and the idea that inflation expectations are on the rise are holding gold here," said Andrey Kryuchenkov, an analyst at VTB Capital.

U.S. Treasury prices were little changed as a choppy stock market revived some safety bids for bonds and offset worries over next week's record $115 billion supply of longer-dated debt. link....